As many legal professionals closely monitor ongoing international trade disputes, one pressing issue continues to dominate legal and political headlines. The European Union (EU) and the United States (US) remain at odds on policy approaches regarding the steel and aluminum industry due to disagreements anchored in Environmental, Social, and Governance (ESG) concerns, more particularly the environmental aspect – carbon intensity.
This impasse came to prominence following the initiation of negotiations for a Global Arrangement on Sustainable Steel and Aluminum (GASSA) in October 2021. The aim of GASSA is to establish a direct connection between import restrictions and exporting countries’ efforts to minimize carbon intensity in metal production and manage global overcapacity in the aluminum and steel sector.
With the spotlight on efforts to combat climate change, a significant emphasis has been placed on the industries that are substantial contributors to global carbon emissions. The metals production industry, for the manufacture of aluminum and steel, contributes significantly to this worldwide dilemma.
The EU has long championed strict environmental compliance standards, requiring efforts toward the reduction of emissions in line with the Paris Agreement. Therefore, the EU identifies GASSA as an effective tool to leverage action in environmentally detrimental industries. However, the US, while also a firm believer in controlling climate change, maintains competing views on the global trade challenges affecting the industry. The US stance generally emphasizes protection of domestic industries and workforce over the environmental concerns put forth by EU regulators.
One thing is clear – the legal and political intricacies surrounding this ongoing dispute are far from sorted, and the impact of these negotiations on global trade practices in these industries will be felt for years to come. Professionals in international trade law, environment law, and corporate law would do well to keep monitor these developments to guide their clients amid turbulent regulatory landscapes.
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